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Stocks Headed Higher on China's Euro-Zone Pledge

Posted
2/15/2012 8:30:00 AM
By: Schaeffer's Investment Research
Referenced Stocks:A;ACOM;AEM;ANF;ATHN

After clawing its way back to positive territory yesterday afternoon, futures on the Dow Jones Industrial Average (DJIA) are trading higher this morning ahead of a flood of domestic economic and earnings reports being released today. The Empire State manufacturing index and the minutes from the Federal Open Market Committee's (FOMC) latest meeting are among the notable reports -- slated for release at 8:30 a.m. and 2:00 p.m., respectively.

Elsewhere, Wall Street is waxing optimistic over promising fiscal news from the euro zone. Specifically, Greek Finance Minister Evangelos Venizelos predicted a bailout resolution ahead of a conference call with the Eurogroup, after today's previously scheduled meeting was canceled . In addition, top Chinese officials announced their intentions to grow investments in the struggling euro zone. Against this optimistic backdrop, all three major market indexes are set to tack on gains.

Dow, S&P and Nasdaq futures

Diamond Foods (DMND )

In earnings news, Weight Watchers International, Inc. (WTW - 79.34) recorded a fourth-quarter profit of $63.7 million, or 86 cents per share, a 30% year-over-year increase from $48.9 million, or 66 cents per share. Thanks to positive global growth in both its WeightWatchers.com division and meeting fees, revenue jumped 13% to $401.3 million. The bottom-line results fell in line with analysts' expectations, but revenue fell short of Wall Street's projection of $412 million in sales. For 2012, WTW is calling for full-year earnings of $4.20 to $4.60 per share. By comparison, analysts are projecting a full-year profit of $4.56 per share. WTW also announced a "modified Dutch auction" to repurchase up to $720 million of common stock, with the pricing to range between $72 and $83 per share. WTW is down 1.7% in pre-market trading.

In its first earnings report since its December IPO, Zynga (ZNGA - 14.53) reported a fourth-quarter loss of $435 million, or $1.22 per share, compared to a profit of $42 million, or 5 cents per share, in the year-ago period. Excluding items, earnings came in at 5 cents per share, while revenue rose by 59% to $311.2 million. Analysts, on average, were expecting a profit of 3 cents per share on sales of $302 million. Daily active users of ZNGA's online games arrived at 54 million, up 13% from the previous quarter. Looking ahead, ZNGA is projecting an adjusted fiscal 2012 profit between 24 cents and 28 cents per share, surpassing the Street's consensus forecast of 22 cents per share. ZNGA is facing an 8.7% drop right out of the gate.

Finally, thanks to strength in international markets, MetLife (MET - 37.32) saw its fourth-quarter earnings soar to $1.13 billion, or $1.06 per share, from last year's earnings of $51 million, or 5 cents per share. Excluding items, operating earnings increased to $1.31 per share, and operating revenue jumped 19% to $16.41 billion. MET's results were mixed, as Wall Street was looking for earnings of $1.24 per share on $16.81 billion in revenue. MET is 2.1% higher in pre-market trading.

Earnings Preview

Today's earnings docket will also feature reports from Abercrombie & Fitch ( ANF ), Agilent Technologies ( A ), Agnico Eagle Mines ( AEM ), Ancestry.com ( ACOM ), Athenahealth ( ATHN ), Blue Nile (NILE), CBS Corp. (CBS), CF Industries (CF), Clearwire (CLWR), Cliffs Natural Resources (CLF), Comcast (CMCSA), Dean Foods (DF), Deere & Co. (DE), Dr Pepper Snapple Group (DPS), Goldcorp (GG), Hanesbrands (HBI), Intrepid Potash (IPI), Marriott International (MAR), MEMC Electronic Materials (WFR), NetApp (NTAP), Nvidia (NVDA), RealNetworks (RNWK), Tesla Motors (TSLA), Vale (VALE), and Zillow (Z). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The Empire State manufacturing index hits the Street today. Also on the day's docket are the NAHB's housing market index, industrial production and capacity utilization, weekly crude inventories, and the minutes from the latest meeting of the FOMC. Thursday brings us housing starts, the producer price index (PPI), the Philadelphia Fed manufacturing index, and the weekly report on jobless claims. The Fed also remains in focus, with Chairman Ben Bernanke slated to speak at an FDIC conference. Finally, we wrap up on Friday with the consumer price index (CPI) and the Conference Board's index of leading indicators.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,396,474 call contracts traded on Tuesday, compared to 854,443 put contracts. The resultant single-session put/call ratio arrived at 0.61, while the 21-day moving average was 0.60.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Stocks in Asia ended comfortably higher today, after Beijing affirmed its commitment to investing in euro-zone debt. People's Bank of China (PBOC) Governor Zhou Xiaochuan asserted that "European countries... are able to solve the sovereign debt crisis," and reiterated that the PBOC and European Central Bank (ECB) "support each other in many policy aspects." Meanwhile, the Bank of Japan's freshly launched stimulus efforts kept the yen under pressure, resulting in a positive session for exporters. By the close, China's Shanghai Composite added 0.9%, South Korea's Kospi climbed 1.1%, Hong Kong's Hang Seng rose 2.1%, and Japan's Nikkei jumped 2.3%.

European equities are also on the upswing, thanks in part to a stronger-than-forecast round of gross domestic product (GDP) data. The euro zone's GDP contracted by a slimmer-than-forecast 0.3% in the fourth quarter, while France's economy unexpectedly expanded by 0.2%. Traders were also encouraged by reports that Antonis Samaras, leader of Greece's conservative party, sent the Eurogroup a letter pledging to implement austerity measures. At last check, London's FTSE 100 is up 0.1%, the French CAC 40 is 1.1% higher, and the German DAX has added 1.3%.

Overseas markets

Currencies and Commodities

The U.S. dollar index is pointed south ahead of the bell, as the greenback was last seen 0.4% lower at $79.30. Crude oil, meanwhile, is set to extend its stay atop the century mark, with the front-month contract 0.8% higher at $101.88 per barrel. Elsewhere, gold futures are looking to pare yesterday's losses , with the malleable metal up 0.6% at $1,728.70 an ounce.

Currencies and commodities

Unusual Put and Call Activity:

Due to technical issues, the Unusual Put and Call Activity charts are unavailable today. We apologize for any inconvenience.

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